Australian governments’ pretend concern over Australia’s universally weak wages growth (see above chart) has been exposed again, with the NSW Government explicitly mandating that the winning bidder for its Roads and Maritime Services IT contract – Indian outsourcer Wipro – employ 30% of its workers from India to keep costs low. From IT News:
A controversial NSW Roads and Maritime Services IT deal that will see a third of IT jobs sent offshore has been handed to Indian outsourcer Wipro, iTnews can reveal.
…up to thirty percent of the work is set to be sent offshore under the deal – a proposal that was forshadowed by The Daily Telegraph last year when revealed the agency’s requirement for “target offshore resource utilisation” to reduce costs…
RMS this week confirmed that the contract would eventually see 30 percent of work offshored…
“The contract ensures that at least 80 per cent of work is carried out within Australia in year one and at least 70 per cent of work is carried out in Australia during year two and beyond,” the spokesperson said.
Wipro has already been used on IT projects for Sydney Water, employing “hundreds of cut-price Indian IT workers”, as revealed by The Australian last year:
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Hundreds of cut-price Indian IT workers are working for the NSW government, being paid as little as $50,000 a year for what should be $100,000-plus jobs at Sydney Water…
Wipro is already involved on IT projects for Sydney Water, having won a tender to “design, build and run Sydney Water’s billing and customer relationship management system”.
There are 120 staff in India and about 300 in Australia working on the system.
“Any Wipro employees based in India that come to Australia will continue to earn their Indian salary plus an allowance to consider higher cost-of-living expenses in Australia,” a spokeswoman for Sydney Water said…
Under the terms of 457 visas, workers are not supposed to be paid at less than market rate…
This is exactly the type of malfeasance that the Australian Population Research Institute (APRI) warned about in its 2016 report “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s visa system, especially involving Indian IT workers.
The APRI report noted how IT professionals, engineers and accountants (including auditors) were the key professions where foreign worker visas were being issued, despite these industries having significant surplus labour:
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The 17,185 IT professionals visaed in 2015-16 (Table 1) indicate the scale of the problem. By contrast, just over 5,000 residents are currently completing undergraduate course in IT each year…
In particular, the IT sector is experiencing the deepest rorting from Indians being paid well below market wages:
As Table 2 shows, some 76 per cent of the 7,542 457 visas issued in the three IT occupations listed were to Indian nationals. The great majority of these were sponsored by Indian IT service companies as intra-company transferees…
Once in Australia their staff are being paid at much lower rates than experienced resident IT professionals and in some cases even new local graduates.
Even more disturbing is the relatively high proportion of these Indian IT professionals (28 per cent) whose 457 visas were approved at the extremely low base salary of $53,900 or less. This is despite the fact that only eight per cent of the 457 visas granted to Indians in the two ICT occupations in 2014-15 were aged less than 25.
The median starting salary for local ICT graduates under the age of 25 is around $54,000. Coincidentally, the 457 minimum salary ‘floor’ is set at $53,900…
As the data in Appendix I show, between 2012-13 when Labor was in office and 2013-14 under the Coalition the proportion of Indian 457 IT professionals approved at the very low base salaries increased dramatically, from eight per cent to 27 per cent…
Clearly, the legislated requirement to pay the 457 market salary rate is not being implemented in the case of the Indian IT service companies (and perhaps other multinationals with Indian branches). The violation is obvious, given that more than one-quarter (28%) of Indian 457s in the two ICT occupations had their visas approved at no more than Australian IT graduate starting salaries…
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How can Australia’s low wage growth possibly be ‘fixed’ when our own governments employ policies designed specifically to undermine pay and conditions?
The treasonous NSW Government is actively working against the interests of its own citizens employed in the IT sector.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
